Essays on social license and nonmarket strategies based on social contract theory

Social License (SL) has emerged to become a concept significant to states, markets, and societies, but business management, when compared to other academic fields, has limited understanding of SL, because of some confusion between corporate social responsibility (CSR) and SL. In Chapter 1, I make clarifications by reviewing multidisciplinary literature through a bibliometric analysis. I found that, while SL, which is based on social contract theory, refers to community approval associated with CSR, the literature on CSR has mostly overlooked SL, because it is often grounded in stakeholder theory that seldom considers communities salient in terms of corporate financial performance. In response to a research direction provided in Chapter 1, I examine in Chapter 2 a boundary condition challenging the positive association between CSR and SL, which many international business scholars take for granted. Applying justice-based and consent-based social contract theory, I hypothesize that CSR, which a multinational corporation (MNC) engages at the global and the local levels respectively, enhances the MNC's degree of SL approved by a local community, but this degree is offset by polarization among community members. Measured through such natural language processing and big data techniques as sentiment and emotion analysis, SL was found to be positively affected by both global and local CSR, and yet the effect of local CSR, but not global CSR, is negatively moderated by community polarization. Responding to another research direction provided in Chapter 1, I further examine in Chapter 3 the necessary and sufficient conditions of two fundamental nonmarket strategies, specifically CSR and corporate political activity (CPA), for both SL and legal license (LL), which represent social and political legitimacies respectively in international business. Combining social contract theory with deliberative democracy theory, I hypothesize that, under deliberative democracy, high CSR and low CPA are necessary for SL, but low CSR and high CPA offer sufficiency for LL. Through a necessary condition analysis on a sample of MNCs operating in Australia, which is a deliberatively democratic country, it was found that CSR is a necessary condition for SL, whereas CPA is a sufficient condition for both LL approval and SL disapproval.